2016 Amendment To CENVAT Credit Reversal Formula Clarificatory, Applies Retrospectively: CESTAT Allahabad

The Customs, Excise & Service Tax Appellate Tribunal, Allahabad on Thursday held that the 2016 amendment to the CENVAT credit reversal formula under Rule 6(3A) was clarificatory in nature. The amendment clarified that, for calculating the credit to be proportionately reversed, credit used exclusively for taxable services or dutiable goods is not to be included; only common CENVAT credit is relevant.The court observed that Notification No. 13/2016-CE (NT) dated March 1, 2016 substituted the...

Recovery Agent Services For Defaulted Loans Eligible For CENVAT Credit: CESTAT Chennai

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 8 September held that services of recovery or collection agents used by a Non-Banking Financial Company (NBFC) for recovering defaulted loans qualify as “input services” for claiming CENVAT credit. A Bench comprising Judicial Member Ajayan T.V. and Technical Member Vasa Seshagiri Rao allowed four appeals filed by TVS Credit Services Ltd., which had availed CENVAT credit of service tax paid on services...

Delhi High Court Waives ₹4.5 Lakh Penalty After Finding Service Tax Default Was Bona Fide, Not Deliberate

The Delhi High Court has set aside a ₹4.5 lakh penalty imposed on a consultancy firm for non-payment of service tax, holding that the default arose from a bona fide and reasonable belief regarding the taxability of its services and was not a deliberate attempt to evade tax.The Division Bench of Justices Anil Kshetarpal and Manmeet Pritam Singh Arora set aside the penalty imposed on Appellant under Section 78 of the Finance Act, 1994, and observed,“the non-payment of service tax by the Appellant...

Gujarat High Court Dismisses Revenue's ₹3.44 Cr Service Tax Appeal Over Fees Collected From Gir Forest Visitors

The Gujarat High Court has dismissed a Revenue appeal against the Deputy Conservator of Forests in a ₹3.44-crore service tax dispute over permit fees, entry fees, camera fees, and other charges collected from visitors to Gir Forest.The court relied on an earlier ruling that had held that such fees cannot be treated as consideration for taxable services, as the Deputy Conservator of Forests was discharging sovereign functions while collecting them in his official capacity.A Division Bench...

Meghalaya High Court Sets Aside Service Tax Demand Over 8.5-Year Adjudication Delay

The Meghalaya High Court has recently set aside a service tax demand against the Assam Rifles Group Insurance Scheme (ARGIS). It held that the Revenue authorities could not justify taking nearly 8.5 years to adjudicate the show-cause notice.The Division Bench of Justice H.S. Thangkhiew and Justice B. Bhattacharjee observed that the delay was “undue and unexplained”. It held that the order passed after such a delay violated Section 73(4B)(b) of the Finance Act, 1994, and was “arbitrary and bad in...

Renting Vacant Land Not Service Taxable Before July 1, 2010: CESTAT Delhi Denies Extended Limitation

The CESTAT Delhi has ruled that renting of vacant land was not taxable for service tax before July 1, 2010. It also held that one-time premium or salami received under a lease of immovable property was liable to service tax, but the extended limitation period could not be invoked against Madhya Pradesh Audyogik Kendra Vikas Nigam Limited without an intent to evade tax or positive evidence of suppression.The tribunal observed, “the immovable property including the vacant land is leviable to...

Bombay High Court Dismisses Revenue Appeal Against Millennium Beer Industries Over ₹21.92 Cr Service Tax

The Bombay High Court on 3 September dismissed the Revenue's appeal against the setting aside of a Rs. 21.92 crore demand against Millennium Beer Industries Ltd., holding that the extended period of limitation cannot be invoked to raise a service tax demand without establishing fraud, collusion or suppression of facts with an intent to evade tax, and A Division Bench of Justices Nitin B. Suryawanshi and Abasaheb D. Shinde also held that the Revenue cannot take different stands in substantially...

No Separate DCGI Approval Needed For Service Tax Exemption On Drug Testing: CESTAT Chennai

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has recently held that Service Tax exemption for clinical testing of newly developed drugs cannot be denied merely because a Clinical Research Organisation (CRO) does not have a separate approval from the Drugs Controller General of India (DCGI).The tribunal found that the drug Sponsors had obtained DCGI-approved permissions for the clinical trials. Consortium Clinical Research Pvt. Ltd. (CCRP), acting as the...

Airport Entry-Ticket Licensee Liable For Service Tax Only From June 1, 2007: Madras High Court

The Madras High Court has ruled that an airport entry-ticket licensee was liable to pay service tax only from June 1, 2007, and not for the earlier period.The court observed that the law was amended from that date to specifically bring the renting of immovable property within the service tax net. For the period before June 1, 2007, it noted that the Delhi High Court had ruled that service tax did not apply to the rental/licence fee in question.“...the appellant is liable to pay service tax as an...

Works Contracts Involving Material Supply Not Taxable As Maintenance Or Repair Service: CESTAT Bangalore

On 3 September, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore, held that composite works contracts involving both supply of materials and services cannot be subjected to service tax under the category of Management, Maintenance or Repair Service (MMRS). A Bench comprising Judicial Member P.A. Augustian and Technical Member R. Bhagya Devi set aside service tax demands against Kerala Public Works Department contractor G. Janardhanan for repair, reconstruction and...

CESTAT Sets Aside ₹93.75 Lakh Demand Against HCL, Upholds BPO Works Contract Credit Denial

On 1 September, the Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that CENVAT credit cannot be denied merely because input services were received at premises not included in the taxpayer's centralised registration, while upholding denial of credit on works contract services used for construction or setting up of Business Process Outsourcing (BPO) branches. A Bench comprising Judicial Member P.A. Augustian and Technical Member Sanjiv Srivastava partly...

CESTAT New Delhi Bars Extended Limitation Where RCM Liability Is Revenue-Neutral

On 3 September, the Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) observed that the extended period of limitation cannot be invoked where service tax payable under the Reverse Charge Mechanism (RCM) would have been available as CENVAT credit, as such a revenue-neutral situation does not establish an intention to evade tax. A Bench comprising Technical Member P.V. Subba Rao partly allowed an appeal filed by Kaps Advertising, restricting the service tax demand to...